Industrial property powers ahead in slowing market

Bermondsey, London Photo: SecretLondon123

Industrial property is powering ahead, despite a slowing commercial market. The sector’s returns reached a total of 1.4 per cent, ahead of a market average of 1 per cent and beating all other commercial property sectors.

The strong performance is attributed by CBRE’s Monthly Index to market leading growth in both capital values at 0.9 per cent and rents at 0.6 per cent.

Other sectors, though, faltered, with returns dipping from 1.2 per cent, thanks to slowing capital growth (down from 0.7 per cent to 0.6 per cent). Rent and income return continued to grow at 0.3 per cent and 0.4 per cent respectively.

Miles Gibson, Head of UK Research, highlights the ongoing imbalance between an supply in both the industrial, logistic and office sectors, which is helping to drive up capital values and rents. As a result, the monthly average of 1 per cent is only marginally behind the 1.1 per cent for 2015 to date, which places the market on course to meet CBRE’s forecast of 13.8 per cent projection for the whole year. The market remains far below the 19.7 per cent recorded in 2014..

Gibson says that the sector is “proving especially attractive to investors seeking an income return”, with those focused on the industrial and office sectors benefitting the most.